Rural Economy and Connectivity Committee Call For

RURAL ECONOMY AND CONNECTIVITY COMMITTEE

CALL FOR EVIDENCE ON IMPLICATIONS OF COVID-19 FOR THE SCOTTISH BUDGET AS THIS RELATES TO THE RURAL ECONOMY AND CONNECTIVITY IN SCOTLAND

SUBMISSION FROM NATIONAL UNION OF RAIL MARITIME AND TRANSPORT WORKERS (RMT)

Introduction RMT is the biggest transport union in Scotland, organising all grades of rail staff and seafarer Ratings and port staff on lifeline public ferries. We organise over 10,000 workers in Scotland. This includes members working in the offshore oil and gas and offshore renewables sectors, which also influence economic health and social outcomes in rural Scotland.

We welcome the opportunity to contribute to the REC Committee’s inquiry. The budgetary implications of Covid-19 for connectivity and rural economic policy directly affect our members across the transport and offshore industries in Scotland. Many of our members live in the rural communities they serve, especially on publicly subsidised ferry routes.

REC Committee Questions In relation to the rural economy: 1. In light of the impact of COVID-19 on the rural economy, how can future budgets best be deployed to develop resilient rural businesses, communities and supply chains?

The economic impacts of Covid-19 on the rural economy are ongoing but future budgets must be used to improve connectivity (i.e. public transport by rail, sea and road primarily) if workers, communities and businesses in rural areas are to be more resilient.

RMT support public ownership and operation of all modes of public transport as the most effective and cost efficient way to do this, without undermining good terms and conditions of employment or the Scottish Government’s Fair Work Convention. The Just Transition Commission’s work and final recommendations will also have a major impact on rural economic resilience.

2. Is Brexit likely to pose additional challenges for the rural economy in recovering from the impacts of COVID-19 and how should funding best be allocated to support recovery of the rural economy in this context?

It will be challenging but the priority for the rural economy after Brexit must be to grow public transport infrastructure and to upgrade infrastructure, vehicles and vessels.

The lack of certainty over the status of trade access and mutual recognition of some seafarers’ qualifications could be additional Brexit challenges in the ferries sector, on top of Covid-19. Scotland’s lack of roll-on roll-off ferry connections to the Continent reduces the maritime sector’s exposure in the event of No Deal.

However, No Deal Brexit could simplify the process of bringing all public ferry contracts tendered by Transport Scotland permanently in-house which would protect local jobs and provide the basis for economic recovery, particularly if domestic food production is needed to fill the gap in lost access to EU markets.

Brexit also provides the Scottish Government with the opportunity to remove expensive re-tendering requirements and bring the CHFS and NIFS contracts into permanent public ownership and operation by public sector ferry company CalMac, with all relevant seafarers, port grades and ships covered by a single RMT Collective Bargaining Agreement. This would also avoid timely and costly re-organisations within Transport Scotland which were recommended by Audit Scotland in 2017 and which are still being worked on.

Similarly, Brexit offers both challenges and opportunities in the offshore energy and manufacturing sectors which are accentuated by Covid-19’s economic impact in Scotland. We support state funding to build domestic employment in the offshore energy supply chain. This would primarily benefit communities and economies in rural areas. For example, decommissioning, ship recycling and vessels supporting all stages in the development and operations of offshore wind farm projects could be based at specialist deepwater yards like Nigg Energy Park on the Moray Firth. The Scottish Government’s Brexit policies should reflect this ambition, which we also cover later in this response.

In relation to connectivity: 3. What, if any, specific financial support should the Scottish Government provide to transport operators while social distancing measures remain in places and passenger-carrying capacity remains significantly reduced as a consequence?

The Covid-19 pandemic and ensuing lockdown, of course, diminished rail and ferry fare revenue. In light of this, the Scottish Government transferred the Scotrail and Caledonian Sleeper franchises onto Emergency Measures Agreements (EMA), mirroring the arrangements put in place for rail operators in England and Wales. An EMA transfers all risk from the operator to the Scottish Government, with the Scottish Government covering the cost base of the franchises, including rolling stock lease payments, for the duration of the EMA period, which was initially set at six months. Under the terms of the EMA, the operators receive a management fee from the Scottish Government at the end of the initial EMA term. At the time of writing, the Scottish Government has not yet published either EMA document, despite requests for it to do so.

The Cabinet Secretary, Michael Matheson MSP, however, confirmed to the REC Committee on 2 September 2020, that the management fee was ‘capped at 2 per cent across the board’. Based upon the Scotrail franchise’s 2018-19 cost base of £826 million1, a 2% fee for the initial six-month period, is likely to be in the region of £8 million. This fee is essentially profit for Abellio, the Scotrail operator, and is particularly significant given that last year Abellio Scotrail posted a loss after tax of £10 million, and in December 2019, the Scottish Government confirmed it was

1 https://www.orr.gov.uk/uk-rail-industry-financial-information-2018-19

2 ending the Abellio Scotrail franchise early, in 2022, following a long period of poor performance.

Prior to the outbreak of Covid-19, the Scottish Government had budgeted £520 million for the two rail franchise operators, an increase of over £100 million from the year previous, with the vast bulk of the funding allocated for Abellio Scotrail. In contrast, in 2016, the first full year Scotrail operated the franchise; it received less than £260m in public subsidy. When questioned on the reason for the significant increase in subsidy in February 2020, the Transport Secretary said: “If revenue growth does not increase to the expected levels that were set out in the franchise agreements, we are required to provide further funding to the franchise provider.” RMT believes that this massive increase in public funding for Abellio, in just five years, because of clauses in the franchise agreement, makes clear that the current operating model is highly flawed and is not providing value for money for Scottish taxpayers.

Across the UK, national rail patronage has risen to circa 35% of normal levels, compared to a low of around 5% during the lockdown. Thus, while rail patronage is increasing, it is likely to be some time before revenue returns to normal levels, especially given the continued need for social distancing. The Scottish Government has not yet said what arrangements it will put in place when the EMAs expire in September 2020, but it is clear that a return to the normal franchise arrangements would not be financially sustainable at current passenger levels. The Scottish Government has said that it is considering extending the EMAs for a further period and confirmed that it incurred additional costs of around £250 million for the first six months of the Scotrail and Caledonian Sleeper franchises.

RMT believes that Abellio Scotrail has failed to provide an acceptable level of service for Scotland’s rail passengers and does not provide value for money for Scotland. Throughout 2019 Abellio Scotrail was operating under two remedial plans and in December 2019, the Scottish Government confirmed its intention to terminate the franchise three years early, in March 2022. In June 2020, it was reported that Abellio was in breach of its franchise agreement after failing to pay its bills on time for over a year. The Scottish Government has also confirmed that Scotrail has failed in part, or full, to meet 39 of its committed obligations prescribed by the franchise agreement.

Rather than continuing to fund Abellio to operate, and make a profit from, the Scotrail franchise for the next six, or more, months, until it exits the franchise in March 2022, RMT believes that it would be far more cost effective for the Scottish Government to instead run Scotrail in the public sector, via the Operator of Last Resort, as is permitted under the Railways Act 1993. When questioned in the REC committee recently on this option, the Transport Secretary appeared to dismiss this as ‘The problem is that we would implement that model for only a limited period of time’.

However, RMT firmly believes that running Scotrail via the OLR from September 2020, would save public money, by ending the profit-driven and inefficient private sector involvement, and allow the Scottish Government to take control of the franchise, whilst preparing a robust public sector bid for the Scotrail franchise from March 2022, as it has committed to. The Transport Secretary also told the REC committee that ‘Unless we have the full devolved powers around our options for

running rail services in future, including the infrastructure element, we will not be able to implement the public sector-controlled public railway’.

RMT strongly agrees that the Scottish Government should be able to appoint a public sector operator for the Scotrail franchise, without the need to go through a tendering process, as it is currently required to, and urged the Scottish Government to make representations to the Williams Review to this effect. However, RMT does not believe that the current position, whereby the Scottish Government has significant control over how infrastructure funding is allocated in Scotland, is a barrier to fulfilling its commitment to put a public sector bid in for the next Scotrail franchise.

It is not clear, when, or if, the Westminster Government will publish the long-delayed report of the Williams Review, and therefore RMT believes that the Scottish Government cannot postpone action regarding the future of Scotland’s railway indefinitely. The Covid-19 pandemic has proven, once and for all, that private franchises are inherently the wrong way to operate the railway. Not only do we need to give passengers the confidence to return to the rail network, we must encourage more people than ever to use the railway as their first choice for journeys, in order to decarbonise the transport sector. Bold action is needed from the Scottish Government, to vastly improve Scotland’s railway, and it can do this by taking control of the Scotrail franchise at the earliest opportunity.

4. What are the implications for future Scottish budgets of action already taken to provide financial support to public transport operators during the COVID-19 lockdown and how could these implications be addressed?

As discussed in our response to Question 3, the Scottish Government committed significant additional financial support to Scotland’s rail operators: £250 million for the initial six month period, on top of the planned annual budget of £520 million. Whilst the Scottish Government has not confirmed what its plans are for when the EMAs expire in September 2020, given that passenger revenue remains significantly below normal levels, there are clearly going to be implications for future budgets.

If the EMAs were extended, at the same level of funding as for the first six months, this would bring Scottish Government funding for rail franchises to around £1 billion for the year. In addition, a further six month EMA extension, with a management fee equivalent to 2% of the franchise cost base could see Abellio Scotrail make a profit from public funds in the region of £16 million over the twelve month period, equivalent to 4.5% of total passenger revenue from the Scotrail franchise in 2018-19.

RMT firmly believes that rather than continuing to enable the private operator, with a longstanding history of poor performance and mismanagement, to profit from the emergency arrangements, the Scottish Government should take control of Scotland’s railways, via the Operator of Last Resort, thus saving the costs associated with the private sector profiteering, and instead transferring these into fare cuts for passengers.

The total ferries budget (services and assets) increased by 21% (£45.5m) between 2016-17 and 2020-21. The ferries budget must be ring fenced for the future and to

continue to increase to protect employment and services, as well as the ongoing subsidy level.

5. How can future budgets best be deployed to lock in the shift towards active travel that has occurred during lockdown and to support the Scottish Government’s goal for modal switch, increasing the use of public transport and to reduce private car use?

RMT agrees that there is an urgent need to decarbonise transport, which is Scotland’s largest emitting sector of greenhouse gases. The transport sector (excluding international shipping and aviation) emitted 12.9 MtCO2e in 2018, more than 30% of total emissions in Scotland. Across the UK, the majority of domestic transport greenhouse gas emissions come from road transport, with 55% coming from cars. In contrast to cars, public transport is far more energy efficient, consuming around half the energy per passenger kilometre than private cars, and less during rush hour.2

Emissions from rail, road and maritime combined contribute around 8.4% of the UK’s total carbon emissions from transport and rail is the most efficient form of motorised transport, in terms of energy use. Therefore, RMT believes that the only way to achieve the reduction in car mileage that is necessary to achieve carbon reduction targets is for a mass modal shift from private to public transport. RMT welcomes that the Scottish Government’s goal for modal switch to public transport.

The Covid-19 pandemic has, of course, created additional challenges for the transport sector, and it is vital that the crisis does not cause permanent shifts away from public transport to private vehicle usage. This would hinder the sector’s decarbonisation, whilst worsening air quality and public health. Concerns around the impact of Covid-19 on public transport usage were shared by the Committee on Climate Change (CCC) in its recently published 2020 Progress Report, which recommended Government investment in public transport to reduce car travel demand.

RMT believes that the privatised railway, which is inefficient, expensive and prioritises profit making over all else, is a systemic barrier to the level of modal shift that is necessary. To encourage, and enable, as many people as possible to utilise Scotland’s railway, the Scottish Government should take action to create an affordable, accessible, integrated, comprehensive and sustainable public transport network. The only way this can be achieved is by taking the rail network into public ownership. This would allow Scotland’s railway to be run as an essential public service, serving the needs of both rural and urban communities, ending the inefficiency and profiteering of private sector involvement, thus, making savings which could be reinvested in expanding and improving Scotland’s public transport.

In addition to taking the Scotrail franchise into public ownership, initially via the Operator of Last Resort, and then with a robust bid for when the current franchise ends in March 2022, RMT believes it is vital that future budgets include sufficient ring-fenced funding for public transport. This would enable sustained investment in

2 http://unionsforenergydemocracy.org/wp-content/uploads/2019/05/TUED-WP12-The-Road-Less-Travelled.pdf

5 the rail network, and allow the creation of a reliable, affordable, accessible, integrated, clean and spacious railway, which is needed to enable modal switch from private to public transport.

It is vital that Scotland’s railway is fully accessible to disabled and elderly passengers and that these groups do not experience discrimination in their access to rail services. Unfortunately, disabled people are less likely to use the railways and experience barriers in utilising them more frequently. RMT believes that the presence of staff, on-board and at stations is key to making rail fully accessible and enabling passengers to ‘turn up and go’. Staff assist disabled passengers at the ticket office, on the platform, at the platform-train interface and once on-board.

Various groups, such as the Equality and Human Rights Commission have expressed serious concerns about the impact of de-staffing the rail network on disabled and elderly passengers.

Currently, however, around 60% of Scotrail stations do not have a staffed ticket office, and Abellio Scotrail’s accounts show a reduction of 25% in their station staff employees since the start of the franchise. This must be addressed in order to make Scotland’s railway fully accessible to all passengers. Staff also have a key role to play in restoring passenger confidence in the rail network after the pandemic, and enhanced cleaning regimes and a visible cleaner presence is integral to this. Taking Scotland’s railway into public ownership, thus ending the inefficiencies and additional costs inherent in private franchising, and ensuring funding for public transport is ring- fenced, will enable the Scottish Government to fully staff the network, with rail employees, who were of course hailed as heroes throughout the pandemic, treated as a vital asset in a safe, affordable and accessible railway.

The Scottish Government budget for motorways and trunk roads has decreased in recent years, with £748 million allocated in 2020-21, £180 million of which was for capital land and works. To enable future budgets to support the shift towards public transport, the Scottish Government should consider the extent to which funds can be diverted from the roads budget, to enhancing the rail and public transport networks.

6. In light of the specific impacts of COVID-19 on the ferries network in Scotland, what should be the Scottish Government’s long-term funding plans for vessel procurement to support a revised Ferries Plan?

Lifeline public ferry services are the lifeblood of Scotland’s rural economy supply chain, especially for the communities on Scotland’s ninety-four permanently inhabited islands and the coastal settlements they are often connected to by ferry route.

Lifeline ferry services, which area also big direct and indirect employers in the rural economy must be maintained at pre-Covid levels in order to develop resilient employment, services and associated local supply chains.

Investment in contracted lifeline ferry services must also be maintained. Loss of revenue from collapsed passenger revenue must not see the CalMac or NIFS budgets cut. The impact of Covid-19 should result in sustained investment in crew

and new vessels, otherwise the reliability and safety of the ageing vessels in service will divert further cost away from these vital public transport improvements for the rural economy.

The chronic failure to deliver two new hybrid ferries on Ardrossan-Brodick and Uig Triangle has derailed the vessel replacement schedule in the Scottish Government’s 2013-22 Ferries Plan. The new ferry on the Islay-Kennacraig route is currently on course to be delivered seven years after the original target date in the Scottish Government’s Ferries Plan (see Annex 1).

The Northern Isles Ferry Services (NIFS) contract should be brought back in-house with immediate effect. The contract recently signed with Serco which came into effect on 30 June this year has yet to be published but even in the best of times economically, Serco’s contracted right to extract capped profit from the NIFS contract drained funds from the industry that would otherwise have been invested back into the Scottish ferry industry. Post Covid-19 the grounds for retaining a private contractor to operate lifeline ferry services have fallen away.

The rural economy and national connectivity would also benefit from the two freighters on the current NIFS contract, Helliar and Hildasay being brought under the RMT’s Collective Bargaining Agreement. This should also extend to any charter vessels required to cope with any bulge in commercial demand, particularly form aquaculture and livestock businesses on Shetland or Orkney. Again, bringing the NIFS contract back in-house would help provide more flexibility and potential access to the wider CMAL-owned fleet to meet short term increases in demand.

The funding shortfall at Orkney Ferries for the local government operated inter-island services is also untenable and must be addressed in the Scottish Government’s 2021-22 Budget, as the ageing fleet is becoming a serious socio-economic as well as industrial problem. The Scottish Government increased the annual grant to Orkney Ferries and Shetland Island Council’s inter-island ferry services by £1m in the 2020-21 Budget to £11.5m3.

This sticking plaster is better than nothing but the Scottish Government must take long term funding decisions on procuring new ferries on these inter-island fleets operated by local councils. On Orkney Ferries routes, for example, the three larger ferries covered by the RMT CBA are all over thirty years old and the average of the entire fleet of nine vessels is approaching forty years.

RMT believe that the contract between the Scottish Government and Orkney Islands Council should be folded into the larger Northern Isles Ferry Services contract and subsidised accordingly. The inter-island services in Orkney and Shetland could then be sub-contracted to the local councils to set the timetable in agreement with the trade unions.

The Future Transport Fund, which was increased by over 38% to £83.2m in 2020-21 should be expanded to include low and zero emission ferries. The two much delayed and over budget ferries at Ferguson Marine for the CalMac routes Ardrossan-Brodick

3 Scottish Government Budget, Level 4 doc, Transport, Infrastructure and Connectivity, Col. A, Line 138.

and Uig Triangle are hybrid Liquefied Natural Gas and diesel fuel. This is an unsustainable fuel design in light of the Scottish Government’s statutory climate change targets and development of hydrogen and other unproven green fuels must be accelerated to avoid negative impacts on the economy and connectivity of rural communities.

As the Just Transition Commission recommended4 in July, the Scottish Government should also increase public investment in ports and harbours infrastructure In relation to both the rural economy and connectivity: 7. What are the implications for the Scottish budget related to these policy areas of the Scottish Government’s stated intention to ensure a “green recovery” and to build a “wellbeing economy” after the COVID-19 crisis?

As discussed earlier in our response, RMT believes that creating an affordable, accessible, integrated, spacious and reliable public transport system, in public ownership, should be a Scottish Government priority as part of an inclusive green economic recovery. Covid-19 must not cause permanent shifts away from public transport to private vehicle usage or increase socio-economic isolation in rural communities.

Targeted investment from the Scottish Government could support its goal of ensuring a ‘green recovery’ from the Covid-19 pandemic, as part of the policy aim of ‘decarbonising rail’ by 2035, some five years earlier than the UK Government.5 The Climate Change (Emissions Reduction Targets) (Scotland) Act 2019 also commits the Scottish Government to producing Climate Change Plans for specific industries, including transport (including international shipping) and energy. Those Plans for the industries where our members work have not yet been published but we believe that the mandating of action is helpful and must be achieved in tandem with trade unions. The Just Transition Commission’s recommendations will also be important in this regard.

Recent analysis undertaken by Transition Economics on behalf of the STUC has demonstrated how Scottish Government investment in a number of shovel ready ‘clean’ infrastructure projects could create in the region of 150,000 jobs in Scotland in the immediate term.6 Within this analysis, the authors estimate that a railway expansion and upgrades programme would create nearly 14,000 jobs and an expansion of bus networks (with new electric buses bought from domestic manufacturers) would create around 500.7 Road building was disregarded from the report because it scored the lowest of all projects considered in terms of job creation.

The ’green economic recovery’ must also be linked to an agenda of Just Transition work that decarbonises all modes of transport and delivers growth in employment in the renewable energy sector and its associated maritime supply chain.

The Scottish Government must make provision in the following areas to deliver this. Firstly, re-training programmes to help workers, especially in offshore oil and gas

4 Para. 3.4, Pg. 19 Advice for a Green Recovery Just Transition Commission, July 2020. 5 Protecting Scotland's Future: the Government's Programme for Scotland 2019-2020 6 http://www.stuc.org.uk/files/Scotland_Report.pdf 7 Ibid

roles, to transition to employment in the new green economy. The £62m Energy Transition Fund announced by the Scottish Government in June8 is a good start but £12.4m over the next five years will not be sufficient to tackle the threat from jobs and skills loss in offshore oil and gas.

Secondly, direct award of public contracts to Ferguson Marine Engineering Ltd for new generation of zero emission fuelled public ferries, as discussed in answer to question 6.

Thirdly, it is essential that the Scottish Government strengthen its ‘Supply Chain Development Statement’ for developers of offshore wind farms leased by Crown Estate Scotland. This would lead to the development of more resilient businesses, particularly around Scotland’s network of smaller, rural ports, from Eyemouth to Montrose and the growing fleet of vessels that are working from them. Seafarer and shoreside employment would benefit from Crown Estate Scotland making a strong and enforceable stipulation over local ‘content’ (jobs and infrastructure) for licensed offshore wind farm projects in particular.

According its annual report in October last year Crown Estate Scotland’s (CES) recorded an £11.4m profit, comfortably exceeding CES’s own £7.3m target for 2018- 19. CES has returned over £20m to the Scottish Government in its first two years of operation. The Scottish Offshore Wind Energy Council, co-chaired by the Energy Minister Paul Wheelhouse MSP estimate that offshore wind projects in Scotland will create 6,000 new jobs by 2030.

Alongside growth in decommissioning, hydrogen fuel, ship recycling and Carbon Capture Usage and Storage, the economy and connectivity in rural communities must benefit from Scottish Government investment in these green industries, some of which are essential to achieving net zero by 2045.

As the Just Transition Commission stated in its recent report:

The supply chain would benefit from greater certainty and a strong sense of direction from government in the coming months if it is to invest in the next generation of technologies that will be the building blocks for a net-zero energy system. While technologies such as CCUS and hydrogen have long- term potential, the extent to which they can deliver support for jobs in the short-term has been questioned. Decommissioning offers more obvious opportunities for creating jobs in the near term. Investment is also happening now, and with more to come, in offshore wind.9

Lastly it is vital the Scottish Government develop a strategy for the post Covid-19 recovery of the Scottish rail freight sector. Rail freight has played a key role in the Covid-19 crisis keeping supply chains moving and ensuring vital medical supplies and food continue to be readily available. Workers in the rail freight sector have rightly been designated as ‘key workers’ but like many industries impacted by Covid- 19 the future of the rail freight sector in the UK is uncertain.

8 https://www.gov.scot/news/gbp-62-million-fund-for-energy-sector/ 9 Para. 4.17 Pg. 12 Advice for a Green Recovery Just Transition Commission, July 2020.

The latest quarterly rail freight usage10 statistics show a worrying downward trend and the lowest total of rail freight moved for 23 years and lowest total of freight lifted for 35 years as a result of fewer container ships docking in UK ports and the increasing competition of road freight which often undercuts the costs of rail freight. The impact of the Covid-19 crisis will also have hit many freight operations hard but statistics from Network Rail show a sustained recovery in rail freight since the crisis began.

As part of the Scotland’s efforts to decarbonise the economy RMT strongly believes that we need maximum modal shift from the freight carried on roads by HGVs (which creates major safety, social and environmental impacts) to rail freight which has proven environmental and economic benefits.

Rail freight is vital in the fight against climate change and produces 76%11 less carbon dioxide and up to fifteen times less nitrogen oxide emissions and 90% less small particulate matter than the equivalent road journey. Rail freight carries goods worth more than £30 billion a year, and generates more than £1.7 billion in annual economic benefits to the UK economy12 so it’s vital that this sector has a bright future.

The Scottish Government must view rail freight as a valuable contributor to its industrial strategy and ambitions for regional economic regeneration, one that should see a new era of the transportation of goods by electrified rail, and opening of more freight lines and development of intermodal interchanges. An integrated railway at the heart of a national transport strategy could invest in proper intermodal freight exchanges that would enable Scotland to build a proper multi-modal freight system centred on rail and enabling a decisive shift away from road haulage.

8. Are lessons learned during the pandemic likely to lead to major shifts in future Scottish Government spending in these areas and, if so, what should these shifts look like?

While it is too early to establish all of the lessons that may be learned from the pandemic, it is now even clearer that running the rail network via privately franchised operators whose goal is making a profit has created a deeply flawed system, which does not prioritise passengers or taxpayers. The Scottish Government has made clear its view that it believes franchising doesn’t work. The RMT believes that the Scottish Government now has a unique opportunity to take bold action to take control of Scotland’s passenger railway, and run it as an essential public service that contributes to emission reductions, improved air quality and better public health outcomes.

RMT believes that there needs to be sustained investment in rail and other public transport networks and infrastructure, as part of the Scottish Government’s plans for a green recovery from the Covid-19 pandemic and in future budgets. There is

10 https://dataportal.orr.gov.uk/media/1738/freight-rail-usage-performance-2019-20-q4.pdf 11 DfT Rail Freight Strategy https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/552492/rail-freight-strategy.pdf 12 https://www.raildeliverygroup.com/files/Publications/2018-06_rail_freight_working_for_britain.pdf

10 potential for funding to be offset by diverting funds away from road building, and from savings made by ending the inefficiencies caused by private sector involvement in rail operations. In the maritime sector, Scottish Government investment must no longer support pay and employment practices which exploit seafarers. From 1 October, National Minimum Wage rates are the legal minimum for all seafarers, applicable and enforceable on all merchant vessels operating between domestic ports in Scotland and the UK, including those servicing or securing offshore energy installations. This should boost employment for local seafarers in the commercial ferry and offshore energy sectors in Scotland.

Annex 1 Vessel Replacement schedule in the Ferries Plan 2013-2213 Vessel Route In service Replaced MV Hebridean Kennacraig - Islay 1985 By 2016 Isles (Large Ferry) MV Isle of Tarbert – Portavadie 1976 By 2016 Cumbrae (summer); winter relief (Small Ferry) vessel MV Loch Largs - Cumbrae (summer) 1986 By 2019 Riddon Relief (Winter - Tarbert, (Small Ferry) Portavadie and Lochranza) MV Loch Winter relief vessel for the 1986 By 2019 Linnhe Inner Hebrides; Tobermory - (Small Ferry) Kilchoan route in summer MV Isle of Mull Oban - Craignure 1988 By 2019 (Large Ferry) MV Isle of Ardrossan - Brodick 1984 By 2019 Arran (summer) (Large Ferry) Ardrossan - Campbeltown (summer) Relief vessel (winter) MV Loch Tobermory - Kilchoan 1992 By 2025 Tarbet (Small Ferry) MV Loch Fyne Mallaig - Armadale 1991 By 2025 (Small Ferry) MV Loch Colintraive - Rhubodach 1991 By 2025 Dunvegan (Bute) (Small ferry) MV Loch Buie Mull - Iona 1992 By 2025 (Small Ferry) MV Lord of the Mallaig - Lochboisdale 1989 By 2025 Isles Mallaig - Armadale (summer) (Large ferry) Oban - Lochboisdale (winter) Oban - Colonsay (winter) MV Caledonian Ardrossan - Brodick 1993 By 2025 Isles (Large Ferry) MV Loch Oban - Lismore 1986 No date Striven (Small ferry) MV Loch Ranza Tayinloan – Gigha 1987 No date (Small Ferry) MV Isle of Oban - Castlebay 1995 No date Lewis (Large Ferry)

13 Appendix 1: Vessel Replacement Programme, Transport Scotland Ferries Plan 2013-22, December 2012.